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    Multiple Choice

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    1.The amount of money that would have to be invested today at a given interest rate over a specified period in order to equal a future amount is called

    1. 1. present value interest factor.
    2. 2. future value.
    3. 3. present value.
    4. 4. future value interest factor.

    2.As the interest rate increases for any given period, the future value interest factor will

    1. 1. increase.
    2. 2. move toward 1.
    3. 3. remain unchanged.
    4. 4. decrease.

    3.If the present value of a perpetual income stream is increasing, the discount rate must be

    1. 1. changing unpredictably.
    2. 2. decreasing.
    3. 3. increasing proportionally.
    4. 4. increasing.

    4.The annual rate of return is variously referred to as the

    1. 1. all of these.
    2. 2. cost of capital.
    3. 3. opportunity cost.
    4. 4. discount rate.

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    Solution Preview

    1. present value.
    we know the future value and so the amount invested today would ...

    Solution Summary

    The solution explains various multiple choice questions in time value of money